Founded in 2016, agilon health is a platform that empowers physicians with the operating model, technology, solutions and capital required to transition from fee-for-service to integrated payment and delivery.
DISCLAIMER: The views and opinions expressed are those of the interviewee(s) and are not necessarily those of McKinsey and Company.
Following is an edited transcript:
Neha Patel: We would love to hear your perspective on the dynamics in the physician industry. In particular, what are some of the near- and long-term implications of ongoing and escalating consolidation of the sector by both hospitals and private equity of primary care physicians?
Ron Kuerbitz: I think it’s hard to assess the effects of consolidation by itself. One of the positives that goes along with the consolidation is the creation of platforms for better systems. With increasing scale, physicians have access to more capital, more tools, and the opportunity for more collaboration.
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But the real issue is what’s the goal of the consolidator? If the goal is to use that organization to drive value, consolidation is pretty close to a prerequisite. We’re working on some systems that allow small practices to get the benefits of organization and investment, but by and large, I think the prerequisite for the country as a whole is going be that some level of consolidation [needs to] happen.
Neha: What impact do you think that will have on various players in the industry?
Ron: Players that are forward-thinking are going see this as a prerequisite, as a benefit. Particularly, we see payers really demanding improvement in value-based care and really starting to drive [the] integration of some of the payer elements and provider services.
Health systems, I think it’s a little bit more hit and miss. There are definitely health systems that see this consolidation as a long-term benefit giving them an organized platform to integrate into the way tertiary care is provided. But I think there are also systems, both health systems and institutional ambulatory services providers, who are resisting the trend and really have doubled down on a fee-for-service environment.
For them, I think this is going be a real challenge, because as physicians, particularly primary care physicians, get organized, get access to data, get access to the opportunity to improve protocols, find new areas of efficiency, they’re going require partners at the payer level [and] at other providers who will enable them and help them move along that continuum.
Neha: Shifting gears, would love to hear [your] view from the physicians’ [side]. With all the new administrative work that’s required of them, what is the value proposition for them to work with various aggregators in the industry?
Ron: The addition of administrative work is probably the biggest challenge in the physician world, at least as we see it. [Around] 63% of family practice physicians exhibit some symptoms of burnout. And, more than 50% of general internal medicine physicians feel real significant symptoms of burnout. That burnout largely is a function of a tremendous load of administrative activity that takes away from their ability to focus on the things that they are really expert on, and the things they know their patients need.
The lack of reward for the skills that you bring to the system, the inability to pursue the mission that you came into medicine for, and then the threat of a lack of independence; those are the three hallmarks of factors that drive burnout.
As a practical matter, the system can’t afford it. We cannot afford to lose more primary care physicians. They are, when well organized, the glue for the whole entire system. I think the rise of administrative work and the lack of the system to create vehicles that reward physician capability—reward physician engagement on their fundamental principles, their mission, and allow them to do that in a way that continues their independence—that’s a tremendous threat to the US healthcare system.
Neha: What do you think is the role of technology, such as automation, in improving physician productivity and [in] some of the [other] issues that you raised? What do you think are the key enablers to unlocking this?
Ron: Technology has been one of the drivers of administrative work. The technology that we’ve deployed to date has gone towards solving other players’ problems—the insurers, the aggregators. We’ve created workload on the physician in order to aggregate data, allow better insight into what’s driving cost, but we haven’t used technology to date at scale, to implement processes that enable individual physicians in the exam room or at the bedside. To enable that workflow is really rewarding and results in higher quality.
There are opportunities just around the corner. The challenge, I think, for the healthcare system is to adopt those opportunities in a way that doesn’t require physicians to fundamentally change their work environment.
Technology needs to enable the activities that physicians are skilled in undertaking and that requires something the tech world hasn’t quite evolved into. [For example,] simple training that doesn’t require an IT staff to implement, and nurses and lower skilled staff who are able to help physicians adopt and implement the technology.
Neha: Many folks have acknowledged that risk is difficult and there is variability of success in shared savings programs. In your mind, is risk working?
Ron: When we talk about risk, we really need to think about the form that the risk takes. So, moving out of shared savings models based on fee-for-service and into global payment structures and into capitated structures especially is very, very important.
But the ability to make that transition requires a lot of expertise [which is] probably impossible for individual physicians to adopt, and hard even for large groups to adopt. While I feel very bullish on the opportunity for the system as a whole to drive significant quality, patient satisfaction, physician satisfaction, and cost reductions out of a risk environment, I don’t think the system as a whole has made any significant progress since the ’90s in supporting that transition.
I think we know that risk can be a fantastic enabler but as a system, as a country, we haven’t made the investments yet to make that success broad-based.
Neha: And have you seen physicians really change their behavior as a result of risk-taking?
Ron: Absolutely. And that’s one of the most exciting things, and it doesn’t take very long. One of the most exciting things is when you provide physicians with data and system support. You don’t have to provide protocols. You don’t have to tell physicians, “This is what you need to do.” In fact, that’s counterproductive, because healthcare is local, and healthcare has got to be personalized between the physician and patient. Giving physicians information about their panel compared to other panels, sub-segments of their panel compared to similar sub-segments around the country, the results of their practice patterns, their affiliated provider’s practice patterns in comparison to others unleashes just a torrent of innovation.
It’s a lot of fun to watch large groups of physicians comparing notes on what they’re doing to manage sub-populations and identify new practice patterns, new workflows, new ways of engaging with their partners, and driving success in improvements in quality and cost.
We’re seeing it now at agilon health. It doesn’t take long. And that’s one of the most encouraging things about the risk environment—when as a system, we put the right tools in place and give the physicians the support that they’re asking for, you don’t have to wait years to see results. You can see it in months.
Neha: Do you think that there’s any components of taking on risks that have become commoditized? And [how] do you believe that physicians will differentiate in the future?
Ron: There are definitely elements of a risk environment that are commodities, and they’re largely in the administrative space. Commodity activities like utilization management and claims adjudication are readily available.
The interesting thing is we de-commoditize them to get the best value out of those administrative functions. Taking utilization management as an example, out of a commodity role and allowing physicians to identify their own practice patterns, their own protocols, using it much more as a screening tool to help make sure that the right decision-making at the right time is directed to the physician and then directed to affiliated providers, and communicating to affiliated providers what kinds of activities are expected of them, for which patient and at what time; that’s a much higher order value than simply screening for unauthorized activities and care.
And we see similarly in claims adjudication, there’s a wealth of knowledge and information that comes back into the system, out of intelligent claims adjudication. Tends to be treated as a commodity activity of simply processing paper, but in many ways, it is the culmination of a long process of organizing care.
And when you think of it that way, the intelligence that you can pull back out of it is really important. And that’s where I think we need to rethink, why is this a commodity? What elements of it are we overlooking when we treat it as just a commodity activity?
Neha: When we think about where the landscape could go, [what is] your perspective on the market characteristics that make a new geography attractive to a risk-taking player, or one that wants to play in the market?
Ron: That’s a great question. Existing markets [that are not well organized] offer tremendous opportunity. You can bring initial skills and initial enablement into that kind of a market and have a tremendous effect. Very highly organized, very sophisticated groups have the opportunity to [explore] the depths of data and use new tools in [artificial intelligence] and predictive modeling in ways that they haven’t done before.
They can find great improvements in quality for very small sub-populations at very high cost or very high mortality rates and drive fantastic improvement in very small populations that mean a lot, both to the providers and to the patients.
We have decades of opportunity, and that means there isn’t a marketplace in the country that has reached its optimum state yet.
Neha: Do you think that PPO-concentrated markets matter at all? And how does the physician aggregation model actually fit there?
Ron: The fact that a market is a PPO market shouldn’t discourage providers from engaging in risk and engaging in population health. In fact, in some ways, those are the markets that need it the most.
They already have some steering tools. The significance of physician engagement [is] really important, because those are the markets that otherwise lack tools for providing information to the payer or to the provider, and through the physician translating that information to the patient. To enable that combination of physician and patient decision-making that is in the interest of the patient, in the interest of high-quality care and low cost.
Neha: We know there’s a lot of value proposition behind Medicare Advantage, but is there one behind Medicaid or is there too little evidence today to prove the value, given the profitability issue?
Ron: The challenge with Medicaid programs is [that if] you’ve seen one Medicaid program, you’ve seen one Medicaid program. Unlike Medicare Advantage, [where] one of the great advantages there is it’s one program. And so, getting investments at scale can happen much more easily with Medicare Advantage.
Medicaid programs, by and large, have done a really good job of starting to lead the way in integrating behavioral, pharmacy, social support services, and medical services. It’s the experimental platform for really addressing social determinants.
While historically, it’s been a tremendously challenging population, when we’ve thought about it as a medical needs population only, I think it’s a really interesting platform for developing great protocols, great capability sets where we integrate those other care support systems in with the medical support.
And there have been some very successful, not large-scale, but very successful programs that have done that, have focused on keeping institutionally eligible patients out of institutions, in their homes. There are fewer stable, long-term models. There are a handful that have been around a long time and have demonstrated success. The system, as a whole, needs some focus and needs some investment in order to be able to take those models and expand them at scale across the country, like we’ve started to see happen in Medicare Advantage.
Neha: You called out a couple of things—pharmacy, behavioral, different factors—that are different for these patients, potentially. What do you think are the most important capabilities that will be required to manage this population, looking forward?
Ron: I think that [fairly] basic care navigation capabilities are the gating issues, because we’re trying to organize different elements of the care delivery system and social support systems.
I think we’ll be able to do that, we’ll be able to get the system, get the care navigation resources deployed effectively. It’s going [to] become a function of how well we [can] identify the needs of individual patients.
Because there are a more various set of resources that needed to be coordinated and brought to bear, the permutations of needs, I think are going to be higher. I don’t have the data to prove that today, but it is my gut feeling that we’ve got a much higher range of variability in the individual patient sets there, in the needs that they’ve got compared to the traditional care for seniors, or certainly compared to care for the commercial population.
So, I think our challenges are going to be first basic care navigation, and then really great data and analytics to identify the needs of individual patients and to make sure that we’re bringing the right set of resources. Bringing the wrong set of resources or suboptimal navigation engagement is going to create the risk that we draw the wrong conclusions.
We think it doesn’t work, when what we did is execute purely. And I think there’s a ton of risk of that, because again, it’s a high-needs population with very thin reimbursement margin for error. It’ll be really easy to conclude it doesn’t work in this population, whereas I think when we look hard at the long-term models, we realize it can. It just is going to take a different way of thinking.
Neha: Ron, thank you for your time. Any closing thoughts?
Ron: I’m really bullish about the future. I think the combination of developments in information technology, in government, in payer, acceptance of and demand for innovation, and [opportunities] among physicians, some large health systems, and some large ambulatory service providers line the stars up like I haven’t seen before.
We’ve had the will and we’ve had the desire from time to time but I don’t think we’ve had the capability before that we’ve got now. I’m really excited to see the innovation that comes out of all the different players that are trying to address these issues in healthcare today.